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A $4 million lobby renovation at the Cadillac Tower in Cadillac Square is scheduled to be finished in January.

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Kirk Pinho

A $4 million lobby renovation at the Cadillac Tower in Cadillac Square is scheduled to be finished in January. Among the changes: new tile, granite, lighting and wall finishes.

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Cadillac Tower

A $4 million lobby renovation at the Cadillac Tower in Cadillac Square is scheduled to be finished in January. Here's a rendering of what it will look like when it's finished.

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Cadillac Tower

A $4 million lobby renovation at the Cadillac Tower in Cadillac Square is scheduled to be finished in January. Here's a rendering of what the two-story space will look like when it's finished.

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KIRK PINHO

The two-story lobby at Cadillac Tower is still under construction after about six months of work.

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John D'Angelo

Nearly 100 years ago, the 40-story Cadillac Tower in downtown Detroit was one of the tallest buildings in North America. Today, it is trying to regain its place among giants.

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Kirk Pinho

Cadillac Tower, built in 1927 by John Barlum, in recent years has had a troubled relationship history, full of would-be suitors who never turned out to be long-term relationship material.

Nearly 100 years ago, the 40-story Cadillac Tower in downtown Detroit was one of the tallest buildings in North America.

Today, it is trying to regain its place among giants.

With a $4 million lobby renovation nearing completion in January, the owners of the 88-year-old building on Cadillac Square just a stone's throw from Campus Martius Park have broader ambitions.

Discussions between the owners, Brooklyn-based Capital Invest Alliance, and several undisclosed hotel brands are underway for a possible conversion of up to nine floors into hotel space, said Paul DeBono, vice president of Southfield-based Farbman Group, which leases the property to tenants and manages it.

That could mean the first hotel rooms that close to Campus Martius, DeBono said. He envisions a boutique hotel, along the lines of what's proposed for the former Wurlitzer Co. building on Broadway Street downtown by New York City-based Ash NYC, which is underway with a $20 million conversion of the building into a 97-room hotel.

Residential space is also being considered, but there are no active plans for it, he said.

Then, of course, there is the dearth of large blocks of quality office space in the central business district. With the city of Detroit formally vacating its 172,000 square feet in the building just over a month ago, Farbman is now marketing the 350,000-square-foot building as one of the few remaining downtown where you can find contiguous space totaling 50,000 square feet or more.

"Nothing like it in the CBD," DeBono said. "One of the main focuses will be ownership reinvesting in the building and actively working to upgrade the building class overall."

Along with adding at least one new restaurant to the city's growing roster, all this is to bring the pre-Depression era building — complete with its nearly windowless western side — into the 21st century after a tumultuous ownership history, planned developments next door that went bust, and years of vying for the attention its flashier compatriots receive.

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JOHN D'ANGELO

The revamp of the Cadillac Tower includes plans for a totally new lobby, already underway, along with talks for a substantial conversion of floors to hotel space.

'A complete overhaul'

Walking into Cadillac Tower today, you'd be surprised to learn, with its exposed pipes and unfinished walls, that renovations to the two-story lobby are nearly complete after about six months of work.

Among the improvements are new granite, an updated entryway, new business directories in the lobby, a pair of new restrooms, new tile, wall finishes, and lighting.

Perhaps the most striking, however, is what will surround a pair of elevators that would go up to the possible hotel space on the third through 11th floors. Designed by Neumann/Smith and manufactured by Livonia-based Quality Metalcraft Inc., the plan calls for a two-story wall made of laser-cut metal panels featuring Detroit neighborhoods and streets that together will compose a skyline of the city, said Jaimelyn Neher, a Neumann/Smith designer. Street names will protrude from the panels to add texture.

"It's a complete overhaul. We are taking something that was many generations (old) and making it first-generation," DeBono said.

Once the lobby renovations are complete, efforts to lease the approximately 180,000 square feet of available office space will begin.

"We were kind of handcuffed" by Detroit's lease, DeBono said. "We didn't have much space in our arsenal to go out and lease, and now we have a big chunk, and we are rethinking the building."

Current main tenants are the Detroit Public Lighting Authority; the human services nonprofit Travelers Aid Society Detroit; Rex Worldwide; and Toledo-based Mannik & Smith Group Inc. If all goes well for Capital Alliance and Farbman Group, expect that roster to grow.

"There are not a lot of large blocks for users downtown that are looking to potentially move," said Jim Berkemeier, vice president in the Southfield office of Advocate Commercial Real Estate Advisors.

Among those with 20,000 square feet of contiguous space available are the buildings at 211 W. Fort St.; the Ford Building at 615 Griswold St.; the Marquette Building at 243 W. Congress St.; and the Madison Office Building, formerly Pricewaterhouse Coopers LP, at 1900 St. Antoine St., said Steve Morris, principal of Farmington Hills-based Axis Advisors LLC.

A dearth of neighbors

Cadillac Tower, built in 1927 by John Barlum, in recent years has had a troubled relationship history, full of would-be suitors who never turned out to be long-term relationship material.

In 2003, it was purchased by New York City-based Northern Group Inc. for $15.4 million. Then six years ago, the company lost control of Cadillac Tower under order from a federal judge after a $17.5 million loan on the building went into default, and a financial overseer from Farbman Group was appointed, Crain's reported at the time.

Cadillac Tower was just one of five buildings Northern Group bought between 2003 and 2007 and let slip into foreclosure. In all, $95 million in unpaid loans were left behind.

And then there have been the prospective Cadillac Tower neighbors that never materialized.

Northern Group announced the Cadillac Centre development, a $150 million entertainment and apartment complex on the Monroe Block, in January 2008 to fanfare. The development was expected to include 84 apartments, a cinema, a health club, 22,000 square feet of space for smaller boutique retail and a 100,000-square-foot space for a larger retailer.

But those plans were announced just two weeks before the text-message scandal that eventually brought down then-Detroit Mayor Kwame Kilpatrick, one of the project's chief proponents. In October 2008, the deal went dead after Northern Group changed plans and a key deadline was missed.

Fast-forward to 2013, when Detroit-based Meridian Health unveiled plans to build a $111 million, 16-story skyscraper on the Monroe Block, next to Cadillac Tower and bounded by Monroe, Farmer and Bates streets, Woodward and Cadillac Square east of the former Compuware Corp. headquarters building.

But plans for that 320,000-square-foot building were scuttled last year due to changing economic factors and the cost of new construction versus leasing. Instead of building a new headquarters next to Cadillac Tower, Meridian opted to jointly purchase the 1.1 million-square-foot Compuware building with Dan Gilbert's Bedrock Real Estate Services LLC for $142 million last year.

As part of an agreement five years ago to bring Quicken Loans Inc. downtown from the suburbs, Gilbert's Rosko Development Co. LLC, registered to one of his closest confidants, has development rights for the Monroe Block with the Downtown Development Authority, owner of the property.

When Meridian approached the Detroit Economic Growth Corp., which staffs the DDA, Rosko's development rights were suspended until the new development plans collapsed last year. Then the rights reverted back to Rosko, which has to submit a development plan next year.

So for the time being, Cadillac Tower is in search of a neighbor.

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Paul DeBono, vice president, Farbman Group

Lower rent, high upside

The building does face challenges for leasing such as small floors of about 10,000 square feet and no landlord-owned parking, Morris and other brokers said.

But still, they said Capital Invest is wise to spend millions on the building to bring it up to speed.

"It offers an alternative to the rents that are going up around it," Morris said. "The trend is that rents continue to go up north of $20 (per square foot). But this building can compete and make good money at under $20."

Rents at some of the buildings around Campus Martius start at $21 or $22 per square foot. Asking rent at Cadillac Tower is about $16.50 per square foot currently, DeBono said.

But "rates are likely to only creep upward on the office side as more renovations are completed at the building," DeBono said.

DeBono said tenant parking is much easier on the east side of Woodward Avenue than the west, and that many current tenants in the 30 percent occupied building "don't have problems finding parking spaces just a few blocks east."

Regardless, the building improvements and possible redevelopment of some of its space are welcome news, said Danny Samson, chief development officer of Detroit-based Sterling Group.